Protecting the cost of clients’ initial disbursements

31 May 2017

David Law, Acasta Europe

Insuring the cost of disbursements without the need to complete a proposal form: Commercial Delegated ATE Insurance

The majority of solicitors appreciate the need to offer their clients financial protection during the course of litigation, however, often this is left until the need arises to issue proceedings. At this juncture solicitors often deem it appropriate to recommend of the possibility in obtaining After the Event Insurance.

However, the client’s financial exposure begins as soon as disbursement costs are incurred prior to making a decision to Issue Proceedings. This subject is far too often overlooked.

The SRA Code of Conduct requires solicitors to protect clients’ interests, and sets out the compliance rules regarding funding and ATE Insurance. At the very least, the client must be informed about ATE insurance and be offered the opportunity to purchase an appropriate ATE policy. Many solicitors meet this requirement by offering such advice in the retainer letter.

Acasta can offer solicitors a Delegated ATE facility for commercial disputes, so that solicitors have the ability to gain access to a straightforward, low cost ATE initiative that is designed to indemnify the disbursements which are incurred during the assessment period of a potential claim.

Put simply, following a claimant’s agreement to purchase ATE cover once prospects have been established as being reasonable but before proceedings are issued, a policy can be self-issued by the solicitor via Acasta’s portal.

The policy offers a maximum limit of indemnity of £3,000 and provides cover for an element of the initial disbursement costs. The premium for this cover is £150 plus Insurance Premium Tax which is deferred and contingent upon the final outcome of the case. To align the claims risk the policy includes an excess or quota share of 50% since there is likely to be a large proportion of claims that fail to progress following full assessment.

Importantly the delegated arrangement will allow cases to be progressed safe in the knowledge that a proportion of the disbursement costs are protected against a possible loss.

Should the claim advance and it becomes necessary to issue proceedings, Acasta will conduct a full assessment of the claim via our standard bespoke ATE application process in order to consider offering a quote to cover the risk of adverse costs and/or own sides disbursements. The indemnity and premium will be adjusted accordingly. The premium shall remain deferred, contingent upon success and be staged in line with the relevant stages of the progression of the claim.

For commercial cases, funding can also be considered for further disbursements and legal costs. Such funding is non recourse and Acasta offer competitive rates.

On the basis that terms are accepted by the client the policy will no longer be subject to an excess.

ATE Premiums are generally staged as follows: Stage 1 – Case inception, Stage 2 – Issue of Proceedings, Stage 3 – eight weeks following disclosure and Stage 4 – sixty five days prior to trial. The stages are slightly different for insolvency cases and can also be amended on a case by case basis as appropriate.